Norkom profits up, confident of demand for services

10 Nov 2009

Irish financial compliance software company Norkom has reported a 14pc rise in pre-tax profits to €3.1 million for the first half of its financial year ended 30 September, compared to the €2.7 million earned in the same period in 2008.

Norkom said revenue for the period was up 2pc to €24.6 million, compared to €24.2 million for the same period in 2008, which the group said was driven by strong revenue growth of 15pc (€5.8 million) recorded in Europe and 9pc (€5 million) in Asia Pacific.

Europe also returned strong revenue growth of 15pc to €5.8 million, although revenue in North America decreased by 13pc to €8.9 million, primarily due to one of Norkom’s key US clients entering Chapter 11 bankruptcy in the US in September 2008.

Norkom said its revenue growth came from both incremental contracts, with more than 80pc of existing clients re-investing in Norkom’s solutions, and also from new contracts, with eight new-name clients secured in 2009. This brings the group’s client franchise to 104 clients in the current period, and includes seven of the Top 10 global banks.

The group said it was confident that the drivers of demand for its business will remain strong. “We see a continued drive from regulators to monitor banking practices, which is expected to increase further over the years ahead, with the rise in international, professionally-executed fraud continuing to grow,” Norkom said.

While the group said it is seeing some delays in decision-making, particularly in the US and UK, it is also seeing increased buyer activity in these markets, giving it confidence of a resumption in purchase decisions during the first six months of 2010.

It also said it believes that a return to normal investment levels in its market is already evident, albeit slowly in some geographies.

Crisis narrowed the field

“We are clearly pleased to have produced these results particularly in a period of significant upheaval and crisis in our core market,” said Norkom’s chief executive officer, Paul Kerley.

“Our capacity to expand our reach into new markets, while, in parallel, generating significant pull-through business from our existing clients, places the company in a strong position to capitalise on a return to normal buying behaviour in our market.

“While the crisis provided a challenge for Norkom, the strength of our market franchise, solutions and business model made it easier to withstand compared to some of our competitors, which have exited the market,” Kerley said.

“With this market consolidation and the continued endorsement of our solutions by industry analysts, we expect to pick up a greater share of the returning demand in the market, underpinning our plans to return to normal levels of growth for Norkom.”

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